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Managing the employment relationship in Romania

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The employment relationship

Country specific laws

What laws and regulations govern the employment relationship?

The employment relationship is governed by:

individual employment agreements;

collective bargaining agreements;

the Labour Code;

other national laws and secondary enactments;

EU law; and

international labour-related treaties to which Romania is a party.

Who do these cover, including categories of worker?

Except for certain categories of worker that are regulated separately and are not subject to employment laws (eg, liberal professions, public servants, managers of joint stock companies and sole person enterprises), the employer-worker relationship is governed by labour law if the work is rendered by the worker under the authority and for the benefit of the employer in return for a wage.

Pursuant to labour law, an ‘employee’ is a person who performs work against consideration under the authority of an employer. Thus, the employee is subordinated to the employer and follows the working conditions imposed by the employer (ie, the allocated tasks, the place of work and the working schedule – collectively known as ‘dependent activity’). In addition to this general criteria, when establishing the employment nature of a contractual relationship, the courts consider the ownership of any equipment used when performing specific activities, as well as the existence of any additional expenses paid by one party for the benefit of the other (eg, travel expenses, secondment expenses and holiday stipends).

Contractors, on the other hand, maintain a high degree of freedom regarding their working schedule, workplace and clients, but assume the risks inherent to their activities (known as ‘independent activity’).

According to the Fiscal Code, a contractor’s activity is considered independent if four of the following seven criteria are met:

freedom to choose the working hours and workplace;

freedom to collaborate with different clients;

exclusive performance risk;

freedom to use the clients’ equipment;

independent use of physical and intellectual capacities;

adhesion to a freelancer category of contractor; and

freedom to perform activities directly or through further employees.

Therefore, the distinction between dependent and independent activities is also important from the perspective of tax contributions. While taxes related to salary for dependent activities (ie, social security contributions and mandatory medical insurance) are paid by the employer, in case of independent activities, the employee must pay such taxes.

Contracts

Must an employment contract be in writing?

According to the Labour Code, an employment contract must be in writing in order to be valid. The obligation to ensure that the contract is concluded in writing rests on the employer.

However, the Supreme Court recently ruled that where an employment agreement was not concluded in writing, the employee can still obtain a court judgment acknowledging the existence of the employment relationship and its legal effects. Such ruling can be obtained even if the employment relationship is terminated at the time when it is requested.

Thus, the employment agreement may not be deemed void if the employee has an interest in relying on it. It remains to be seen whether the Romanian courts will consider that the lack of a written contract does not make the contract void if the employee has an interest in claiming that the contract is void on this ground.

Are any terms implied into employment contracts?

The law provides a minimum set of rights for employees and other conditions that cannot be excluded or diminished by the will of the parties. Such rights and conditions may thus be deemed as terms implied into employment contracts.

Are mandatory arbitration/dispute resolution agreements enforceable?

Under Romanian law, mandatory arbitration and dispute resolution agreements are not permitted and are unenforceable with respect to individual labour disputes. This is because the Labour Code expressly provides that the courts should resolve disputes, and that any agreement aimed at the waiver or limitation of an employee’s rights as set out by the law is void.

Potential collective labour disputes are as follows:

the employer refuses to execute a collective bargaining agreement;

no such agreement is in place or has expired;

the employer refuses to accept the demands of employees; or

the parties to the collective bargaining agreement fail to conclude the agreement by the date set out by the signatories.

These disputes may be subject to a form of arbitration expressly regulated by law – namely, that carried out by the Office for Mediation and Arbitration of Collective Labour Disputes affiliated to the Ministry of Labour. However, to date this institution has not been established.

How can employers make changes to existing employment agreements?

As a matter of principle, the employment contract can be amended only with the consent of both parties through written addenda. However, the law provides two situations where the employer can unilaterally amend the employment agreement: relocation; and secondment.

However, these measures can be adopted only under certain conditions, and they can be prolonged only with the employee’s consent.

Foreign workers

Is a distinction drawn between local and foreign workers?

In accordance with EU rules and national laws, foreign workers benefit from the same level of protection as local workers. Nevertheless, citizens of non-EU member states must obtain work permits, and in principle also require the appropriate visa if their presence in Romania is required for the purposes of employment.

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